Sainsbury’s reports huge fall in profits

UK supermarket group Sainsbury’s has reported a massive fall in profits, but the company says that sales are improving.

The firm reported pre-tax profits for the year to March of £15 million compared to £610 million the year before.

However, while like-for-like sales fell by 0.4% for the year, they began to improve in the fourth quarter, increasing by 1.7%. Total sales from continuing operations also increased by 5.5% to £16.3 billion.

Sainsbury’s, which was once the country’s leading supermarket, but is now in third place behind Tesco and Asda, launched a three-year recovery plan last October. The plan included the recruitment of five new members for the firm’s operating board, most of whom had previously worked for Sainsbury’s competitors, Tesco, Asda and Safeway.

The firm has also invested £400 million over the next three years in order to improve pricing, product quality and customer service – 7,000 price cuts have been made in Sainsbury’s stores over the past year.

Sainsbury’s has also closed nine of its smaller 'Local' convenience stores, which were deemed unprofitable. Two more will close next month, although another store previously earmarked for closure – in Fenchurch Street, London – will now remain open. There are also plans to update nearly half of the firm’s convenience stores and refurbish 131 supermarkets.

Under the recovery plan, 3,000 additional shop-floor staff were recruited in order to improve customer staff. Sainsbury’s announced today that an additional 10,000 workers over the age of 50 would be recruited in the coming months, because the film believed that this age group could offer a “range of diverse skills”.

Sainsbury’s also reported that “good progress” was being made on improving stock availability, which had been regarded as one of the chain’s most serious problems. In today’s statement, the firm announced that in stores where processes and stock inventories had been improved, the number of ‘out of stock’ products had been reduced by around 75%.

The statement said: “There is still much to do as our sales grow and we need to ensure we understand the full capability of the whole supply chain before making further changes. Our priority is not speed but as with all our operations, enabling our colleagues to continue to deliver an improved customer experience whilst we make longer-term changes.”

Commenting on the report, Sainsbury’s chief executive Justin King said: “We have made good progress and can see early signs of improvement in our customer offer and sales. We are on track but still in the very early stages of a long-term recovery programme. We are committed to running a business that constantly improves the shopping experience for our customers and this is at the heart of all our plans and activities as we grow our sales.”

(KMcA/SP)